Gymboree Corporation filed for Chapter 11 bankruptcy protection Monday.
The children’s wear company, which operates 1,291 Gymboree, Janie & Jack and Crazy 8 locations, has been laboring under $1.4 billion in debt, culminating in rumors of a pending bankruptcy filing last month.
The retailer plans to restructure to reduce its debt by more than $900 million. Gymboree has secured more than $308 million in debtor-in-possession financing to continue operating as normal through the bankruptcy proceedings, including paying vendors with goods and services due on or after June 11 .
Forbes reports the company plans to close between 375 and 450 locations.
“We have three great brands, strong operations and dedicated employees, and throughout this process, we will continue to deliver superior service to our customers and put them at the center of all we do,” Daniel Griesemer, president and CEO of Gymboree said in a statement. “We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today’s evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree’s long-term growth.”
Coinciding with the bankruptcy news, Gymboree announced that CFO Andrew North will be stepping down for personal reasons. North will remain with the company as a consultant for the time being. In the meantime, Liyuan Woo, director at AlixPartners, has been appointed the interim chief financial officer. Also, James A. Mesterharm, managing director and co-lead on turnaround and restructuring services at AlixPartners, will act as chief restructuring officer.
Ironically, Gymboree is struggling at a time when retailers are searching for ways to make shopping a fun experience for consumers. The retailer was one of few to do so from its inception as a play space for kids. Eventually, it pivoted to include traditional retail stores.
With three brands under its umbrella, the corporation positioned itself to appeal to all moms regardless of the size of their wallets. But over time the line between the price points began to blur, allowing each concept to cannibalize sales from one another.
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Competition in the kids’ market is fierce with mini-me looks at fashion fashion stores offering pint size looks at equally diminutive prices. Target, another leading competitor in this space, is re-emerging as the go-to for small wardrobes with the launch of new private label collections, including Cloud Island and Cat & Jack.
Gymboree launched in 1976 and was acquired by Bain Capital in 2010 in a $1.8 billion leveraged buyout.